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April 3, 2020
CAP: Answers to Your Questions about Small Business Assistance During COVID-19
On April 3, federal assistance programs, such as the Paycheck Protection Program, began offering loans to small businesses. The Coronavirus Aid, Relief, and Economic Security (CARES) Act created more than $350 billion in emergency aid for small businesses during the COVID-19 national emergency and economic downturn. The outline and questions below compiled by the CAP provide information regarding what is available to pathologists and their practices/laboratories from the CARES Act and other federal government assistance programs.
Outline of CARES Act Small Business Provisions
- Paycheck protection program
- $349 billion in loan forgiveness grants to small businesses and nonprofits to maintain existing workforce and help pay for other expenses (eg, rent, mortgage, and utilities).
- Physician practices with 500 or fewer employees are eligible to apply.
- Emergency Economic Injury Disaster Loans (EIDL) grants
- A new Small Business Administration (SBA) economic injury emergency grant program providing up to $10,000 to small businesses and private nonprofits harmed by COVID-19 within three days of applying for an EIDL loan.
- Subsidy for certain loan payments
- $17 billion is available for immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. Under it, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months.
- Employee retention credit for employers subject to closure
- The provision provides a refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 crisis. The credit is available to employers whose (1) operations were fully or partially suspended, due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50% when compared to the same quarter in the prior year.
Frequently Asked Questions
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Starting April 3, 2020, small businesses and sole proprietorships can apply for the Paycheck Protection Program. Starting April 10, 2020, independent contractors and self-employed individuals can apply. These loans are for businesses with 500 or fewer employees. Businesses can receive 2.5 times the average monthly payroll costs up to $10 million. Payroll amounts included salaries (excluding salaries in excess of $100,000, foreign employees, and FICA and income tax withholdings), commissions, employee benefits (eg, health insurance and retirement benefits), and state and local taxes. Loans can be used for payroll (eg, salary capped at $100,000 on an annualized basis for each employee), interest on mortgage obligations, rent, and utilities. Interest is 0.5% fixed rate and is due in two years. Read the Treasury Department’s fact sheet on the paycheck program.
The law defines “payroll costs” as including:
- A salary, wage, commission, tips, or similar compensation (capped at $100,000 on an annualized basis for each employee)
- Employment costs, including,
- Costs for vacation; parental, family, medical or sick leave payment
- Dismissal or separation allowance
- Payments for an employer’s group health benefits (including premiums)
- Payment for retirement benefits
- Payment of state or local tax assessments on employee compensation
For a sole proprietor or independent contractor, payment that is a wage, commission, income, net earnings from self-employment, or similar compensation, with a cap of $100,000 in one year (pro-rated for the covered period).
Yes. Loans will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities. Loan payments will also be deferred for six months. No collateral or personal guarantees are required.
Businesses are encouraged to apply quickly due to the funding cap. The application form is available on the Treasury Department’s website. Regulated lenders will be approved and enrolled in the program, which is open until June 30, 2020.
Yes. Businesses will be able to receive an EIDL and a Paycheck Protection Program loan if businesses use the funds for different parts of your business. For example, a business can receive an EIDL and apply it toward working capital and use a Paycheck Protection Program loan to cover payroll. The online EIDL application is available on the Small Business Administration’s website.
Yes. The SBA will provide additional loan resources to small businesses through:
- 7(a) program, with loan amounts up to $5 million for working capital, expansion/renovation, new construction, purchase of equipment, etc.
- Express loan program, providing up to $350,000 for no more than 7 years with an option to revolve.
- Community Advantage, a pilot program allowing mission-based lenders to assist small businesses in underserved markets with maximum loans of $250,000.
- 504 loan program, which is designed to foster economic development and job creation and/or retention.
- Microloan program, involves loans up to $50,000 through nonprofit lending organizations in underserved markets.
More information is available on the SBA website.
The Treasury Department and the Internal Revenue Service have launched the Employee Retention Credit program. The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: state and local governments and small businesses who take small business loans. The amount of the credit is 50% of qualifying wages paid up to $10,000 in total. Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Wages taken into account are not limited to cash payments, but also include a portion of the cost of employer provided health care. More information is available on the IRS website.
Yes. On March 28, the Centers for Medicare & Medicaid Services (CMS) announced an expansion of its accelerated and advance payment program for Medicare participating physicians and other providers to ensure they have resources needed to combat COVID-19. Most providers will be able to request up to 100% of the Medicare payment amount for a three-month period. Physicians billing under Part B will have 210 days from the date of the accelerated or advance payment was made to repay the balance. Accelerated or advance payment request forms vary by Medicare contractor and can be found on each individual Medicare Administrative Contractor’s (MAC’s) website. For more information, read this CMS fact sheet and this American Medical Association (AMA) guide.
- The AMA offers tips for keeping your practice in business during the COVID-19 pandemic.
- The US Chamber of Commerce Coronavirus Emergency Loans Small Business Guide and Checklist.
- National Federation of Independent Business Guide to New Federal Lending Options.